Credit report, credit scoreOne of the most significant factors a Plano mortgage lender will review when you apply for a new mortgage loan is your credit history and score. While some people have stellar credit, others have a troubled credit history with lower scores.

If you fall into the latter scenario, you may be wondering how lenders will assess your credit situation when you apply for a mortgage in the near future.

Reviewing Your Credit ScoresPlano Home Loans

Initially, lenders will review your credit report and your credit scores. Your scores will have a direct impact on the interest rate that you qualify for or if you qualify for a loan at all. There are prime mortgages for good credit borrowers and sub-prime mortgages for those with a blemished credit rating.

If your scores are too low (usually lower than 620), however, you may not qualify for a mortgage. A Loan Officer can tell you more about their credit rating thresholds and the terms that you may qualify for.

High Debt Balances

Your mortgage lender will dig deeper into your credit report after an initial review of your credit score. Your debt balances will be reviewed to determine your debt-to-income ratio. Provided your debt-to-income ratio and your credit rating are in line with requirements, high debt balances may not be an issue. Essentially, the lender will determine if you are able to make your payments on time as scheduled or if your debt balances appear to be burdensome. Even if your debt balances are high, you may be approved for a loan if you can afford to make the payments.

Warren Whitaker Plano Mortgage Guy

Warren Whitaker Plano Mortgage Guy – NMLS#620924, 972.523.8353

Credit Score Analyzer

One of the unique tools that Warren Whitaker utilizes provides for his customer is a credit score analyzer.  This tool is provided by the credit reporting company and will analyze the customers existing credit situation and if there is an opportunity to pay down or pay off a credit account and what the impact will be on the customer credit score.  Although the results are not guaranteed, the tool gets pretty darn close to estimating the updated credit score.  If you are thinking about buying a home, contact Warren Whitaker at 972.523.8353 to discuss your credit situation.

Difficulty Making Timely Payments

Your mortgage lender will also review the number of late payments on your credit report as well as the dates for those late payments. When late payments are clustered together, this may indicate a temporary rough patch rather than an on-going issue with making payments on time. However, if you have multiple payments that have been late over the course of the last year or two, this may indicate that you are not creditworthy as a loan applicant.

A credit report can tell a lender many things about you. While it superficially can tell a lender more about your outstanding debts, it also delves into previous financial issues and your overall responsibility with managing debt. If you have suffered from credit problems in the past, you may consider reaching out to a mortgage professional, like Warren, for more insight on your credit situation.

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